• (1 point each) Prepare AJEs that should be made on 12-31-15, the end of the accounting year, for each of the following situations. If no AJE is required, indicate “none.” Assume the company only makes AJEs at the end of the accounting year. In addition, identify the impact, if any, on the financial statements if you failed to make the appropriate AJE. Indicate NE for no impact, U for understatement, and O for overstatement. Use the following format to indicate the impact of failing to make the required entry for each situation.
• (5 points) X Company’s financial records showed the following during 2014:
• (3 points) N Company’s capital structure consists of 200,000 shares of common stock. N’s retained earnings balance at 01-01-15 was $3,100,000. Assume N had a 30% income tax rate. At 12-31-15, N’s records showed the following:
  • Prepare an income statement in good form for 2015.
  • Compute N’s retained earnings as of 12-31-15.
• (3 points) Information (in dollars) related to Lobnitz Service Company for 2016 follows.
• (4 points) Changes in all balance sheet account balances of E during the current year, EXCEPT the change in E’s retained earnings account follow. Compute E’s net income (or net loss) for the current year assuming the only 2 entries E made to her retained earnings account during the current year were for a cash dividend declared and paid of $75,000 and her net income (or net loss) for the current year. (This is NOT a statement of cash flows problem – do NOT format it like a statement of cash flows problem.)
• (4 points) Because of a flood, Josephus Corporation lost most of its accounting records. The CFO kept certain data related to the income statement. The data follow:
• (5 points) The following accounts appeared on the trail balance of B Company at December 31, 2017.

Assets Liabilities Expenses Revenues Net Income Owners’ Equity

XX XX XX XX XX XX

• On July 1, 2015, the company rented a machine for 9 months and paid $18,000 in advance. The journal entry to record the payment included a debit to a permanent account.
• On March 31, 2015, the company collected $600 of rent for 12 months in advance. The journal entry to record the receipt included a credit to an income statement account.
• On September 1, 2015, the company collected $6,000 as rent for 6 months in advance. The journal entry to record the receipt included a credit to a balance sheet account.
• On October 1, 2015, the company borrowed $24,000 for 1 year at 3%. Interest and principle are due on October 1, 2016.
• On February 1, 2015, the company invested in a $50,000, 10-year bond that pays 3% interest every three months starting May 1, 2015.
• On August 31, 2015, the company rented equipment for 10 months and paid $15,000 in advance. The journal entry to record the payment included a debit to a temporary account.
• On September 1, 2015 the company borrowed $4,000 for one year at 2%. The principle will be repaid on September 1, 2016. Interest is paid semi-annually starting March 1, 2016.

Payments made for office supplies $50,000 Insurance premiums receipts $520,000

Interest expense on money borrowed $40,000 Office rental revenues $210,000

Wages & salaries paid $80,000 Advertising receipts $460,000

X follows the accrual basis of accounting. The following were taken from X’s balance sheets:

12-31-14 12-31-13

Office rental receivables $34,000 $32,000

Advertising-related receivables 21,000 18,000

Prepaid advertising 25,000 29,000

Prepaid office supplies 18,000 23,000

Wages & salaries payable 21,000 22,000

Interest payable 6,000 12,000

Unearned insurance premiums 12,000 19,000

Unearned office rental revenue 6,000 14,000

Unearned advertising revenue 34,000 43,000

• What was office supplies expense during 2014?
• How much cash was paid out for interest during 2014?
• What was wages & salaries expense during 2014?
• What were insurance premiums revenues during 2014?
• What were office rental receipts during 2014?
• What were advertising revenues during 2014?

Merchandise sales $950,000

Cost of goods sold 240,000

Selling and administrative expenses 260,000

Loss on the sale of a fixed asset 11,000

Inventory 25,000

Interest expense 8,000

Dividend income on equity investments 12,000

Accumulated depreciation 210,000

Dividends declared during the year 30,000

Restructuring charges relating to a closing N’s factory in Indianapolis* 100,000

* The restructuring did NOT represent a strategic shift that had or will have a major effect on N’s operations.

Sales revenues 790,000

Selling, general, and administrative expenses 270,000

Investment income 18,000

Gain on the disposal of the tax preparation division * 150,000

Operating loss of the tax preparation division up until its disposal * 224,000

Interest expense 9,000

Miscellaneous expenses 4,000

* The tax preparation division was considered a component

Prepare an income statement in good form for the year 2016. Assume a 28% tax rate and that 80,000 shares of common stock were outstanding during all of 2016.

Cash decreased $ 50,000

Accounts receivable increased $ 33,000

Inventory decreased $ 74,000

Fixed assets increased $200,000

Accumulated depreciation increased $ 45,000

Accounts payable increased $ 80,000

Salaries payable decreased $ 30,000

Unearned revenue decreased $ 11,000

Notes payable decreased $100,000

Common stock increased $ 50,000

• Sales returns and discounts were $15,000
• Interest expense was $16,000
• Cost of goods sold was $300,000
• Selling, general, and administrative expenses are 25% of cost of goods sold but only 10% of gross sales
• Josephus’ income tax rate is 30%
• Josephus had 50,000 shares of common stock outstanding during the year

From the previous data, prepare an income statement in good form.

Notes Payable (short-term)	$192,000	Accounts Receivable	$518,000
Accumulated Depreciation – Bldg.	83,000	Prepaid Insurance	56,000
Retained Earnings	544,000	Additional Paid-in Capital	1,125,000
Salaries and Wages Payable	34,000	Common Stock	163,000
Income Taxes Payable	156,000	Buildings	991,000
Cash	170,000	Inventory	1,580,000
Bonds Payable Due 1/1/2025	1,200,000	Land	465,000
Allowance for Doubtful Accts.	7,000	Accounts Payable	409,000
Notes Receivable (due in 6 months)	138,000	Interest Payable	5,000

Compute each of the following:

1. Total current assets

2. Total property, plant, and equipment

3. Total assets

4. Total current liabilities

5. Total stockholders’ equity